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tv   Power Lunch  CNBC  August 3, 2012 1:00pm-2:00pm EDT

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a little less imperfect. call... and lock in your rate for 12 months. liberty mutual insurance. responsibility. what's your policy? "power lunch" begins right now v. a great weekend. breaking news. a huge day for the markets. a day after the bulls fled they're staging a massive, massive comeback. the gains are so big all this week's losses have been erased. finally, it's a friday and we have the dow jones industrial average up 235 points on the trading session. that's equal to just under 2%. the s&p 500 is up 27 points, just about 2% and closer to that 1400 level. nasdaq composite up 2% on the trading session. 62 points to the plus side. even gold participating. up 15 bucks on the trading day, just under a 1% move there. west texas intermediate crude up
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four bucks, almost a 5% move. all of this despite the fact that the unemployment rate ticked up to 8.3% but 163,000 new jobs created and that is better than the market expected. tyler's back here at ec. i'm here on the floor of the nyse. let's start out with bob pisano. >> 5 to 1 advancing to declining stocks. not only erased the losses of the week, we're at a three-month high. the russell 2000, the small cap, lagging and transports lagging but up today. take a look at the last three months and this is very important. you might think it's moving up. there's the three-month high on the s&p. put up the big gainers. defensive names have had the big advances in power of the market. telecoms, utilities and the health care stocks. that's about as defensive as you can get. how about the ones down the most
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in the last three months? remember, we are at three-month highs on the s&p 500. there's the materials and the financials and techs. don't kid yourself. the big market gains still a bit in the defensive sector. what i want to see now, let's see the material names advancing more. but with the global economic situation, that's going to be the tough part. guys, back to you. >> all right. thank you, bob. by percentages, the nasdaq leading higher for most of the morning and where we find bertha coombs at the nymex. hi, bertha. >> it has to. that's part of the reason seeing within the s&p tech sector is the strongest performer. we are seeing folks pile back in to apple now up about 5% for the week. google, intel. they're all stronger. for the first time this week, first time in seven sessions, facebook actually getting a big bounce back. getting a leg up from linkedin's better than expected numbers and groupon and zynga doing better.
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worst is activision. despite the fact that the earnings look pretty good and boosted the outlook, concern of dropping numbers with the world of warfare subscriptions. tyler, are you among those that subscribe? >> i am not. i wouldn't know a joystick from a fork but i know a fork. thanks very much. scott wapner the best chef i know by the way is also host of "fast money halftime report." it's been a crazy week. >> it has. >> what's your sense of what the traders are saying? >> what a difference a day makes. yesterday all talk, no action in the aftermath 0of the ecb meeting. now the traders and the ones i'm talking to, more bullish. joe, a guy you hear from, says the chase for performance leads the markets higher. stephen weiss growing more bullish. he thinks you have an all clear. jobs report good. draghi is going to be there. it's a matter of when.
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>> and how and what. >> larry fink of blackrock in there yesterday on the floor of the stock exchange telling the guys to buy the weakness. it changes from a day-to-day basis. you know that as well as anybody else. people look at the 250-plus move on the dow and feel better. >> thank you very much. back to you, sue. >> thank you. what does the jobs report showing 163,000 new jobs but a higher unemployment rate mean for the prospect of a move by the fed? the global market strategist and steve liesman is here, as well. joe, let me get your reaction to it. the unemployment rate ticked up a little bit but the street better than what it expected on a week where we had mixed economic news on so many fronts. where does this put the fed? >> i think the movement in the unemployment rate certainly a step in the wrong direction but if you look at the private sector payrolls, it reinforces the fact that the labor market
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is healing but maybe not a fast enough pace we'd like to see. so if you think about what the fed's going to do, ultimately nothing really changed. i think expectations are still building, they're going to expand the balance sheet and the fact that the numbers were a little bit mixed looking beneath the lines and understand what's going on in the labor market, the prospects are still there. >> steve, do you agree? the guys before the show said, yeah, better than we expected but doesn't take the fed option off the table and stuck in between. >> so in math, sue, there was this idea that as the limit goes to zero, there's an infinite number of halves in there. right? >> right. >> this moves the fed closer to qe3 but not a qe3 number. if it's based on what to do just on the jobs report, if the meeting were next week, i don't think the fed pulls the trigger on qe3 on 163 on payrolls for a couple reasons. i think the number by itself is strong enough to keep the fed off the table and the report
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taken as a whole is inconclusive enough to keep the fed. qe3 is a major step. the fed feels if it just did 200 and something billion dollars of continuation of operation twist, feels that was a major step. looking for action from the european central bank. could be devicisive as to the outcomes for the economy. i think we have to have a measure lower here in order to bring the fed in because it's a very consequential step to take. >> do you agree? >> i do. it reinforces the fact that the labor market is healing but a slow pace. the fed is on the fence and wait and see what bernanke has to say at jackson hole. >> if the fed knew it did x to get y response i think it would do it and another this ing to hold it back. it needs to be convinced the market needs this. i don't feel like it thinks that a move, a big qe move to give us
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10, 20 basis points on the 10-year is decisive enough for the cost throughout. >> steve, do you agree with joe, though, it heightens the expectations or perhaps puts a bigger burden on the me believes at jackson hole? >> i think jackson hole is shaping up to be a very important speech and interesting to see which way the chairman goes. if it's a case for qe, that's a decent signal it's coming but talking about the options that are out there, it signals he is not decided which way to go. we'll hear from a lot of fed members out there and talk to them and figure out which way are they leaning and i think why is important. >> so joe, ideally, what would you like to see from the federal reserve? >> you know, i think we have talked about this in the past. you talk about what the fed can do to help the economy. with the long end of the curve with interest rates this low,
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will it do much for stimulating economic growth to push it lower? i'm not so sure i see that. clearly they would benefit from the expectations or the hope that the fed to step in. and part of the rally i think has to do with the recognition of central banks becoming dovish. you heard draghi's comments. a step in the right direction and taking a look at what the fed said, again, suggesting that possibly you may see them step in. >> you'll be with us for the rest of the hour. go ahead, steve. >> another uptick in the unemployment rate ahead of the next meeting might change the game but if we get another print like 160,000, 170 on the payroll, it keeps the fed on the sidelines. >> thank you. again, joe, you will be with us for the rest of the hour. how do you play today's move to the upside? kim forrest of fort pitt capital group is with us to talk about it. >> sometimes what we think is best at fort pitt is a little willful neglect of the portfolio
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because if you don't trade you can't trade at leisure. if you feel compelled to look at the portfolio, we look for overweight positions and perhaps pare them back. say you bought at&t, it's a 6% stake now. we would probably trim it back and take some profits. >> all right. kim, thank you very much. thanks, kim. see you in a little bit. now for knight capital which, as you know, right behind me, the post behind us here, on the floor of theew york stock exchange, the nightmare on wall street is not over yet although they seem to be getting a little bit of a reprieve or were earlier this morning from wall street. right now, the stock is trading up 25% at $3.27. they started the week as a $9 stock. when all was good and then the tech debacle. the stock was down. kayla tausche is working hard on
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the story for what's next but first mary thompson at knight hq in jersey city for us. mary? >> reporter: hey there, sue. earlier this morning we were trying to talk to the employees. most said they could pn't talk the press. she said cnbc get a life and want you to know that snooiknig a great firm and said that the company would find a solution to its problems. now, of course, fueling hopes that a solution would be found is a report earlier today by "the wall street journal" the company secured a line of credit to tide it over through today. the line needed is a software glitch on wednesday caused millions of bad trades and a $440 million loss for knight. not to mention the hundreds of millions of dollars lost by shareholders. now, news of the credit line, though, failed to appease a number of big clients like fidelity, e-trade and vanguard
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sending the retail orders or typically send the orders through knight. fidelity declining comment to cnbc reportedly routing trades around knight. e-trade and vanguard telling cnbc they're staying away for the moment. facing a big loss and falling revenue, tom joyce and the team are scrambling for a solution, a solution people on the street say needs to happen in the very near future in order for knight to survive and for more on that let's go to my colleague kayla tausche. >> thanks so much, mary. the firm has until monday to survive and because the trades on wednesday, knight on the hook for them. $440 million and when those trades settle, they will be on the hook for the entirety of that amount. that's why they hired a firm for a sale or a capital injection for the company. that's something that we expect to happen, maybe not today but definitely over the weekend. a lot of friends of knight's on wall street really seeking to rescue this firm to help shore
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up its capital base in this time of need. now, of course, there's a report this morning about the potential loan or credit line rather that it has gotten to be the regulatory capital that it needs to operate business today but that still doesn't answer questions of potential long-term funding or capital to pay for the trades when they come due on monday. as far as a deal goes, we're told there's suters for both parts of the company and all of the company. with, of course, selling the entirety of it being the most capital friendly option for knight at this time. scitadel rumored and private equity. as far as who ends up with this, we'll have to wait and see. sue? >> kayla, thank you very much. a story that we're following very closely here at cnbc. right, of course, behind me here at new york stock exchange. seema mody joining us now. >> yeah. the fda approving a colo-rectal
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drug. deutsche banc modeling in $150 million in peak worldwide sales of the drug for regeneron. back to you, sue. >> thank you very much, seema. on a big market day, we are hitting the coast coming up next on "power lunch." two big stories to tell you about when we come back. first up, it is the trial of the century out in san jose. key testimony coming today as apple and samsung fight over the patents. apple is up 1.5%. check out facebook. it is now up almost 10% on the trading session. stock, though, still a big loser since the ipo. jumping today, however. before the break, five big names that are moving today. we have a gain in microsoft. almost 4% in hp. and almost 3.25% in cisco. back in a minute.
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welcome back to "power lunch." i'm kate kelly with breaking news on knight trading group. as you know, when they wound the trades that night they did so with goldman sachs. goldman sachs took the other side of that trade helping knight sell off the accidental purchases of about 150 stocks and resulted in the $440 million charge i'm being told. in other words, goldman sachs
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has been mentioned as a possible advise tore knight trying to seek cash or a possible deal, something to help them get out of this cash crunch they're in. as a result of these erroneous trades. but as well, goldman sachs played an unseen part in helping to unwind the trades on wednesday and in three days' time with t plus 3 settlement rules, they have to play goldman $440 million. there's questions i'm told as to whether knight comes up with the cash. the deal is fluid. they reached an agreement on wednesday night in principle but whether or not it goes through is whether knight secures the cash position. they have the weekend and monday to make this agreement with goldman sachs an official one. >> hey, kate, can i ask you a quick question. could goldman not extend to them a further line of credit which would allow them to settle? it is kind of -- you're mixing money to a certain extent but
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isn't that a possibility if goldman was willing to take the other side of the trade, could another part of the goldman extend the line of credit? >> i'm sure that's possible and the other talks with large banks on the street but essentially goldman agreed with them to undertake the block trade. knight obviously got the 150 or so stock positions and didn't mean to get. didn't want to sell them on the open market on wednesday. let's see if we can do a bilateral trade over the counter agreed to. i think at the time there might have been a greater level of confidence they had the cash to do this and then there may be now. the situation i'm told is very fluid and may be able to settle the trade and move forward but that's going to be dependent on trading with the usual partners, keeping the revenue going and probably either getting an extra credit, getting a cash infusion or a deal in the next 48 to 72 hours. >> going to be a busy weekend for knight and all involved there, kate.
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we should point out as you see we will be joined by the co-founder and former ceo of knight in five minutes. meantime, key testimony in the apple samsung patent fight. it is being billed as the patent trial of the century so far. and jon fortt is there live. jon? >> reporter: tyler, two tech hea heavyweights. a controversy appears to be laid to rest having to do with samsung releasing to the press some excluded -- some evidence that wasn't going to be submitted to the jury at trial late last week or sorry earlier this week. the judge saying she is not going to sanction samsung for that and sort of warning them off of doing that again. polling the jury to make sure it wasn't tainted. it's not. the other reason why it's a big day, two of apple's biggest names taking the stand. the head of ios software was
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going through security as i was coming out moments ago. the reason why they're important is they're apple's two my mare mouthpieces with communicating to the public and to developers. right now, phil shiller on the stand making the case that the iphone and ipad success was not assured and that a big part of the reason why people like them is design. why's that important? well, a key part of the trial is design. apple's trying to say it's distinctive and unique. samsung saying they're obvious. apple's internal surveys say half the people buy the products because of the look and makes the argument they're distinct. back to you. >> jon fortt, thank you very much. all right. take a look at this chart. it's a chart of facebook since it began trading. facebook is up $1.90 right now. the last trade puts that at almost a 10% move to the upside. well, it went, of course, public and if you bought it then, it's
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not so good. down 40%, up big time today as i said. regardless, investors are concerned. today advice of mark zuckerbuer and the board. first julia boorstin. hi, julia. >> reporter: sue, facebook has made a lot of changes to bring in more money. wall street, of course, eager to see whether or not these changes work. so here's some of the things that ceo zuckerberg has done since the ipo. perhaps most important, facebook started showing ads to half billion mobile users. streamlining the buying process of the ads and allowing market earls to target just mobile. the new format on the devices of sponsored stories is off to a strong start both on mobile and desktops, generating a million dollars in revenue a day. facebook is also testing a change to target specific users. that should be quite valuable but no word on when it will
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be -- officially launched. and the company starting to serve up ads to, a first step of ads to sites across the web. facebook also took steps to diversify away from reliance on ads. trying to grow its payments revenue and got rid of the clunky credits allowed developers to price items in local currency and users to make in app payments from mobile devices and in an effort of a new revenue stream, they have an app center to sell apps or subscriptions. facebook taking a cut. not all announcements last quarter about product. facebook appointed coo sandberg to be a director on the board. sue, back over to you. >> thank you very much, julia. back to seema mody now with a market flash. >> unusual volume in shares of interpublic. reporting that a french advertising agency is weighing a
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bid for u.s. rival interpublic and saying a bid would be worth at least $6 billion and big moves today up better than 12%. back over to you. >> thank you very much. julia boorstin mentioned facebook. we'll have more on how to fix the stock later and two big players in the social media world to see how they would fix twitter. up next, though, what does the co-founder of knight have to say about the company that he left? we'll find out after a quick break. first, five more big winners on the trading session. they include a gain of 1.63% for disney. back in a moment. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream.
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and businesses lead the world. the new new york works for business. find out how it can work for yours at joining us first on cnbc to discuss knight capital group's trading glitch is kenneth pasternak, former co-founder and ceo. sir, welcome. we should point out as a matter of the record it was 2002 that you actually left knight, then known i believe as something different than knight group and you have spent a fair amount of last decade fighting allegations, charges by the s.e.c. relating to the time there. you were vindicated completely. that was then. this is now. can knight survive? >> knight can definitely survive. >> how? >> keep in mind knight was a $1.3 billion revenue with $200
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million in cash flow so it needs to restore the confidence of, you know, the community at large but it's a very important player and, frankly, a profitable player until three days ago. >> should it survive? does it deserve to survive? is it so important, in fact, it must survive? >> if you look at knight's history, it was using technology innovation as the internet and other technology evolved. i think without knight, you'd have a whohole, a hole of a fir that uses technology and innovation to serve the markets. >> does it need merely lines of credit, help, assistance, forebearance to survive on a white knight? and if so, would you support that? >> i think knight from what i can ascertain has credit. it has to regain confidence in the balance sheet and more than
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adequate. could use bolstering but the ability to process at exchange level qualities will be maintained. >> here was the company you said brought a lot of technology to the market. but it was technology that tripped it. you just brought in the big word of this which is confidence. it has shaken confidence in the broad market. but certainly, among its clients, companies don't want to do business with it anymore. that's an existential entity. >> you have to understand two things. one is that what knight does do is it's processed order flow for 17 years and automated environment with almost no glitches and take it, you know -- it did have five minutes and it, again, it did try to take actions to protect its customers so, really, in the process of protecting its customers it did suffer a severe blow but if you look at the
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whole scheme of things, it's availability almost unparall unparalleled. >> potentially a fatal blow? you think not? >> i don't think so. >> you think they have enough balance sheet strength and cash flow to get through not just today but next week and the week after and the week after without a white snooigt. >> i do. i'm investing in the company. >> how much stock to do you own? >> a significant six-figure position. >> in shares or dollar value? >> in shares. >> shares. six figure in that. what do you think is next for this company? how does it get back the former strength if, in fact, a lot of customers don't feel secure with the trading platforms? >> i think you have heard from three or four people running away. i think there's like a significant majority of people who understand what knight can do and its availability through the last 17 years that will keep with it. >> if the company is forced to seek a white knight, a partner,
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a co-investor, who would be on your short list? >> i think it would be a little judgmental to me but i think the type of partner would be a -- >> describe them. >> a private equity partner who understands the dna of the company, the mission its serves for investors and that it will survive best as an independent company. >> someone who has a long-term time horizon, how long do you think it will take for this company to get back to some semblance of its former self? >> i think the company's going to rebound very quickly in weeks not months or years. >> why do you say that? >> because i think it serves an unmet need in the marketplace. both the enhanced value of its executions and processing ability. >> can the current ceo survive? >> i think his crisis management is exemplary and i'd certainly be a supporter.
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>> sir, thank you very much for coming on today. >> you're welcome. >> appreciate it. co-founder of the knight group. sue is on the floor at the nyse at the knight post. were they watching? >> they were. who can blame them for watching? it's a tough week for them. i think one of the big worries is how soon can they rebound? it's reflected in the percentage move to the upside in the stock. however, that said, it is going to be a difficult weekend. i think for everyone who works with knight and everyone who has had a relationship with knight. and that i think includes the big firms like the fidelities and the like. they have to make big decisions whether to continue trading with knight but right now the mood is much better than it was yesterday. i think there is great worry about reputational risk long term. and how that reputation gets restored but again it was a
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software glitch. it was a technology glitch and i think most of the people i talked to at knight feel as though they've got today and it's a tough weekend. we'll see what monday brings. all right. to sharon epperson. gold prices closing right now. a volatile week in the gold market. sharon's here to guide us through what's likely to happen at the close. hi, sharon. >> hi, sue. just talking about that with traders in the gold pits and reflecting the relationship between equities, commodities and the euro. we are looking at gold price that is are above the 1600 level. in fact, closing up about 18 bucks on the session today. the fact that initially we saw a bit of a downdraft in gold prices when the jobs number came out, then traders looked at the numbers said maybe there's a more accommodative policy out of the fed to see more stimulus and perhaps added to the gold rally and then looking at the
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broad-based rally across the sector. that's definitely had an impact, as well. look at oil up 5% and the rest of the commodities rallying, as well. the fact remains we are still in the trading range. sue? >> all right. sharon, thank you very much. to the trading action here on the floor where the triple digit advance better than 225 points is holding on right now. bob's down on the floor of the new york stock exchange. has a much better feel than moesz of the days this week, bob. >> i was interested in that interview with kenny. i spent time with him in the late '90s on the night at knight trading and i'm pleased to hear that he's coming out in favor of the firm and investing in that. always nice to hear from a former employee over there. important thing about the markets today, folks, we have a three-month high in the dow, in the s&p 500.
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the laggards are leaders now. so you'll notice the russell dow transports are up, the big laggards in the last three months. the big cap s&p sectors moving? financial, energy and materials. there's the three market laggards. they're playing catch up. not telecom stocks or utilities or health care. those were the market leaders in the laos months. this tells me there's more interest in broadening this rally that we have been having in the last day. back to you. >> all right. thank you very much, bob. coming up, the facebook fix. two industry insiders on what mark zuckerberg needs to do right now. facebook is up big time today. by the way, it is up 9.3%. we are back in two minutes with the dow jones industrial average up about 228 points. i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550
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welcome back to "power lunch." rick santelli here on the floor of the cme group. what a week it's been. jobs data today definitely better than many expected. let's leave it at that for the moment. look at the chart of 10s. here traded up to 160.
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we closed at 148 yesterday as we sit at 156. we're up 8. open this chart up to a one-week chart back to the 27th. you can see we settled at 155 last friday and 156 arguably it's unchanged on the week. you look at a boon. up close to 20 basis points at 142. open up to the first of july, exactly one month highs. as far as the big steepening in spain, the secondary market doesn't price new issues with shorter maturity paper and know the real interest rates on a 2-year in spain. back to you. >> thank you very much, rick. joe tanius is back with us. you know, joe, i'd like to get your opinion on this. i know that full disclosure you can't discuss knight per se or any individual stocks for that matter but can you address the issue of investor confidence and some are saying the lack thereof given the situation with knight,
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the spike in volumes and the flash crash, the jpmorgan whale trade. but you know, when you put it altogether, how do you think it's affecting the retail investor? >> i think it's clearly affected the retail investor. look at stocks and bonds. you had so many events over the past few years that investors had to deal with. not only headline risk out there but also the macro concerns and concerns of the fiscal cliff here in the u.s. and europe and how it's resolved. but i think it's important to realize that there are going to be some opportunities out there. either opportunities and there are risks and this is why we talk about developing the right portfolio with the right aloe case of risk assets and alternative investments what. >> do you think it takes to get the individual investor back in here? we haven't even talked about the fiscal cliff that's looming. there are headwinds here. what's your best advice to the individual investor watching this unfold and saying, there's no reason for me to invest right
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now against this? >> i think there are a few things. ask yourself when you're buying in to risk equities, realize that by buying stock you are buying ownership as in a business and entitled to your share of profits so take a look at what's going on in profits. not as spectacular as last quarter, it is a high for the s&p 500 and important with the right allocation. is there a possibility of things going up from here? absolutely. is there a possibility things are shaken from here? yes. absolutely yes. how do you develop a portfolio to develop on the upside when things go right and reduce the volatility when things go wrong? >> all right. joe, we let you go. we have had so much breaking news. we hope you join us again. pleasure. tyler, back to you. >> thank you very much. time for the power run down and today all about jobs and economy. joining us as they do every
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month, mike morial, former mayor of new orleans and ron christy, ceo of christy strategies. welcome to both of you. there was something in the jobs report, sort of for everybody. democrats, i suppose, mayor, point to the idea that the total jobs added highest since february. ron, those in the gop side say, yeah, but unemployment went up to the highest rate since january. which is the most important number here, folks? unemployment rate or the jobs added? major? >> i think the jobs added. the total payrolls is a much more important number. not to dismiss the unemployment rate. but when we look at the number of jobs created this month and look at an average number of jobs, private sector jobs, that is, created since the beginning of the year, about 150,000 per month. that's strong but not strong enough for us to really eat in to the unemployment rate. the unemployment rate is affected bay variety of factors and people who are actually
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looking for work. so i think the number of jobs created is slightly more important than maybe the unemployment rate but let's not dismiss the importance of the unemployment rate. >> ron christy, the same question, but you can't help but say no matter what the numbers are, they're not pointing to an economy growing very fast. we need more than 163,000 jobs really basically to absorb new entrants. >> that's right. the report is very disappointing. when you get beneath the onion, peel it back and you find 153,000 people who gave up looking for work altogether. if you look back at the number of folks working in june to july, you lost 200,000 people. so, i'm very concerned about the unemployment rate ticking up .1 of a percent because it shows we need 200,000 to 300,000 jobs a month for solid job creation and haven't seen that and the president's folks in 2009 told us the unemployment rate would be at 5.6%.
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we need a different direction and a new course. >> if we go over the fiscal cliff, when's to blame? >> i think the politicians in washington are to blame for that. the sequestration threat of january 2nd with $1.2 trillion in cuts, half a billion dollars of the defense industry will be disastrous. i think president obama bares a lot of blame for not making sure that the super committee could find a viable alternative. >> mayor morial, who to blame going over the cliff? >> tyler, we are all going to be in the canoe and we are going to cascade down the waterfall. i don't think people are as concerned about who's fighting over the ore. the important thing is that devastating, deep cuts, not just in the defense budget, but in the domestic spending areas, could create much more unemployment than we already have and it's important that some sanity return and so,
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there's joint responsibility. there's co-owned i think responsibility when it comes to trying to find what the solution is but we're going to all be in the canoe together. >> right. it's that time year again, gentlemen. hall of fame game and lsu mayor, number one, in the preseason polls. going through the year. i want you in this game, too, ron. thank you very much. >> see you next month. take a look at moly corp. due to the slumping cash flow, may need to secure additional financing. that's the news there. back to you. >> thank you very much. facebook has had a rough two and a half months since the ipo. next, two advisers with advice for mr. zuckerberg. we'll be back in two. [ male announcer ] how do you trade? with scottrader streaming quotes,
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a deeper dive on facebook right now as you know it's trading up with the markets in today's session but overall hammered since the ipo. so we called in two veteran tech players who have come up with a couple of solutions on how mr. zuckerberg might want to face facebook. one of the hottest ipos of the first dot-com boom and boost era watching the stock rise then more than 700% before flaming out and eventually crashing. he now leads another company, sugar crm and with us is don steinberg, now president of a social site that agree gates corporate branding. thank you, gentlemen, very much. >> thank you. >> larry, you have advice of trarnsparenc transparency.
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how so any. >> first thing is to tell your shareholders when's happening. they have the ards going in the social. tell people what's happening with the business. you can't simply not. investors value transparency. they value vizn't. and on the earnings call, mark didn't give them that. and the first thing i'd tell him is, you have to be transparent. >> is he the appropriate guy to run the company? some people say rightly or wrongly, he is a genius in terms of int venting the model and the company itself but perhaps the ceo role is not the appropriate one for him. larry, do you think that's the case? >> look, i think the ceo has to have vision. mark built a fantastic business. let's not lose sight of this. they have 950 million visitors on it. that's a lot of people. it's a company that will do 5 billion in revenue this year. this is a real business there so i wouldn't be too quick to say he's the wrong guy. >> hold on a second. breaking news of julia boorstin of zynga.
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julia? >> that's right. electronic arts has filed a lawsuit against zynga saying that zynga's game the ville ing fringes on the copyrights to the facebook game the sims social. this is a show down of zynga of a social gamemaker. zynga issued a response sending the response to say -- saying that it's unfortunate that ea thought this was an appropriate response to the game saying that the ville is newest game in the franchise. saying ironic that ea brings the suits shortly after launching sim city social with an uncanny resemblance to theville name. we'll see how it's held in court. back over to you. >> all right. let's rejoin john steinberg here out buzz feed with facebook. facebook stock is a buzz kill over the past two months. if zuckerberg were here, what
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would you tell him to do? >> there's two ad products to move the needle. facebook exchange allows them to take data of sites, if you look at a pair ofsites. if you look at amazon and don't buy it, facebook can find you and that should triple the value of those ads in the right rail so that could really move the needle on revenue if they roll that out and are more aggressive. and sponsored stories that's in the main flow, that's as transformative as television advertisi advertising. brands need to create social advertising. not unlike the move from print to television advertising. >> these are tweaks or are they fundamental changes and does the company need that fundamental change? >> there's a level of aggressiveness that i think needs to be taken. inventory needs to be opened up more quickly for sponsor stories. right now it's very tieny. they're treading a bit too delicately and there's a massive amount of training and education the sales force needs to do with all the media buyers, all the
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agencies. there needs to be a full court press sales effort now. >> larry, if i could come back to you, the advertising model is the way that facebook has said to investors they are going to make money. how do they make money from mobile, which is the way things are going? >> well, first of all, let me come back to advertising. advertising is a very, very tough way to make money on the internet. really google is the only company that's proven that you can do it that way. so part of my advice here to mark would be i think they have to diversify revenue streams. mobile is part of that. they have a ton of users in mobile. there have to be ways they can monetize that. the other thing i would look at is data. facebook has an immense amount of data about people. data services are very, very valuable business. i think there's some opportunities there. so, yes, push on advertising, but advertising is a really tough way to make money on the internet. i look to diversify revenue streams and find other ways to create business there. if you look at what linked in as
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done, linkedin has done it extremely successfully. >> let's talk to john stieinber one more time. maybe one of the reasons they have treaded so del kricately i they are afraid of offending their base. we don't want to inundate you with sponsor stories and sponsor ads. give me a react to what he said about linkedin. have they done it really well? >> i think they're different businesses. linkedin is so tied to business and employment. i disagree with larry. i think facebook should keep the focus on advertising. they do have the defining advertising products for the next facebook of the web. i think they could eat all banner advertising. the facebook social stories work two, three, four times better in terms of influencing people. they just need to execute on this as aggressively as they have in building the 900 million person platform. >> sue? >> all right, tyler. when we come back, we have a lot
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still ahead. it's a huge market day. stocks recouping their losses for the week. and night trading is actively traded today to the plus side. here's a look at the dow, up 226 points. most actives right now include bank of america up 3.5 points, knight capital is up 34%. enter public group up 10%. back in a moment. ur soul mate. no, no it's her dad. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl. hey don't worry. e-trade's got a killer investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the e-trade 360 investing dashboard.
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today's poll, $129 billion has been taken out of u.s. stock funds in the past year. what are you doing with your money? 36% say buying stocks followed by selling stocks, buying bonds and selling cds. next after the knight capital debacle, is it time to lower the speed limit on wall street? we're back in two. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something.
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it's a very strong day on wall street. the dow jones industrial average up under two percentage points at 233 to the plus side. s&p up better than 2%. nasdaq up better that 2% and the russell 2000 is up almost 3%. >> we've had a great week with you. sorry we didn't get you on more today. would you be buying into this close? >> i would be watching it go up and be happy with our portfolio and have a great weekend. >> time to hold and enjoy what the market is doing. >> absolutely. >> it's been an interesting week. kim, it's been


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